What CFOs Are Thinking: AI, Talent Crisis, Gen Z, and More

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Blake Oliver: [00:00:04] In the end, marketing is just numbers, right? It's about taking somebody on your website and turning them into a customer through a funnel with conversion rates. And that all turns out as revenue in the financial statements. It's all connected.

David Leary: [00:00:19] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:24] Hey, everyone, and welcome back to the show. I'm Blake Oliver.

David Leary: [00:00:26] I'm David Leary.

Blake Oliver: [00:00:27] And we are joined today by Adam Zaki [00:00:30] from Cfo.com. Adam, welcome to the show, guys.

Adam Zaki: [00:00:33] Thank you so much for having me. I've become such a big fan, so forgive me, I might be a little bit of a fanboy during this episode.

Blake Oliver: [00:00:39] Well, I'm a big fan of Cfo.com. I've been reading for years. You're on my Feedly. Uh, we cover stories from CFO on the show, including yours. Adam. So great to have you on talking about the trends that you are seeing in the world of finance, the CFO world, the side that we are not quite as familiar with here on the accounting podcast, but [00:01:00] is really important because most accountants do not work in public accounting. They work in corporate finance and accounting departments. So I'm really curious, Adam, what are the trends that you are seeing big picture trends in 2024? Uh, what have you been covering like what is on the minds of CFOs?

Adam Zaki: [00:01:19] I mean, first thing that comes to mind is I right? When I first started covering I about a year ago, it was much more of that. Oh my goodness, this is going to completely affect my job. [00:01:30] How does this even work? How do I not fall behind when I compare myself to everybody else when it comes to AI? But most recently it's been interesting. I think that there's been a hype that's kind of been deflating around AI in the CFO community, and it's become much more of a realistic sense of, you know what, it's not as much of a boogeyman anymore, is it? Now it's like, all right, how do we actually put this to work? And the questions have become much more focused on. And just going back to I was just at the CFO Leadership Council's [00:02:00] event in Boston, and I spoke a lot about AI, of course, but the focus this time around was not like, how is this going to blow up my job and really affect me? It's going to the questions were much more focused on things like, you know, how do I become a better prompter? You know, what are the cybersecurity implications of this type of stuff? So CFOs are learning and the realism around AI is setting in. So that's definitely a trend I've been noticing is that, like I said, AI is much less of a boogeyman than it was a year ago.

Blake Oliver: [00:02:27] Still, though, there's a lot of corporations that [00:02:30] aren't letting their employees use AI. Um, my wife works for a fortune 50 company and cannot use AI in her job. I hear this from a lot of accountants working in corporate finance. What do you have an idea of? Like how many teams are actually using AI in their work to do financial analysis, financial statements, that sort of thing?

Adam Zaki: [00:02:53] Well, you know, the Duke Fed survey just came out yesterday. I wrote it up. And it's interesting. I think that depends [00:03:00] on how big of a company it is. The larger the company, according to the data out there, the more likely they are to train their employees on AI. Implement AI, but smaller companies are much less likely to do this, and I think it just comes down to cost. I think it's these tools are very expensive. You know, Blake, I know you've been on the road. You've gone to these trade shows. Every company is AI. Now, just to even differentiate what these products do and all these different companies has become a challenge in and of itself. [00:03:30] And so I think if you're a CFO or working for a larger company, those resources might be more available to you, because as CFO, you might have the time to go out and explore those things. But if you work for a smaller company, you're in the weeds of the finance and accounting. You don't have the time to go attend a trade show and talk to 13 different booths. You know, you want technology that's going to fix your problem tomorrow. And I don't know if AI brings that to the table yet. Mhm.

Blake Oliver: [00:03:54] Yeah. That that's the that's the challenging part is that we have these tools but we really don't know how to use them [00:04:00] yet. Um I've just been learning by doing and following a few people online and, and just playing around with it. Right. But there's no, there's no courses you can take on how to do this in accounting. I don't know of any professors that are teaching courses on how to use ChatGPT to do accounting work. Um, but yet, you know, 75% of employees are using AI at work. That was a story, uh, in CFO. Uh, was that one you reported? I think it was. Yeah. Yeah, yeah. [00:04:30] So it's like we have this situation where people are using AI, but maybe not officially.

Adam Zaki: [00:04:37] Which it's funny. I covered a work trend where I wrote up a bunch of work trends. One of the new trends that have popped up is this term called BYOB. Bring your own eye to work, right? Right. And I think that's where that 75% is. It's people just going on ChatGPT and saying, hey, copy edit this email. I think a majority of people are doing that, but I don't know how many people are actually using it in the weeds of [00:05:00] finance and accounting. And I think that's where the question is, are we using it to copy edit things? Yes, of course we're using it to ask it even for me, like when I have to look up a complicated finance term that I've never come across. You know, we we spoke about this before. I'm not a CPA. I went to journalism school. So a lot of these terms that I come across in this job, I have no idea what they are. And ChatGPT has been a great tool for me to have conversations with it and learn about finance and accounting. It's been a great tool for me to do that. But and I and I think that comes across in a lot of different industries, but [00:05:30] for finance and accounting and the weeds of it, I just don't know if it's there yet. I think the hype is starting to come down and I, I just I'm interested to see how this unfolds over the next year or so and the real ways that it can be used.

David Leary: [00:05:43] And I think the, the way these surveys count, I use is just very there's a lot of variable in that. And because I think I saw we could go to two weeks ago into it in the UK for QuickBooks, they had a survey and I think it was like 97 or 99% of all accountants. Bookkeepers use AI because [00:06:00] I think there's AI in bank feeds, right? There's AI in like receipt scanning and bill scanning. And I think there's this big umbrella. Ai doesn't have to be one of the GPT two tools. So so these surveys are really all over the board, the accounting industry, which is probably why you can't make heads or tails of it either. Like like what's the reality. Yeah. Mhm.

Blake Oliver: [00:06:20] Yeah. In your story here, the one that had the 75% uh usage stat. It says also that only 41% of [00:06:30] leaders plan to redesign business processes with AI, and just 25% of companies are planning to offer AI training this year. So the the the definition of what constitutes I use is what we got to think about. Right? Like you said, everyone's using it, but what are they using it for is my big question.

Adam Zaki: [00:06:50] You know a lot of the focus to and I've covered data that says that a lot of the training is stuck at the top. You know, CFOs are getting the AI training on how to use this stuff, which [00:07:00] should not really be the case. Right? The people working in actually doing the finance and accounting, especially these larger companies, should be getting this training. But according to the data we've seen, that's not really the case that these upskilling, the term upskilling is so popular nowadays that's being focused at the top of that.

Blake Oliver: [00:07:17] And that's the wrong way to do it, because we've seen many studies in different professions that show that the people who benefit the most from AI are the least skilled employees. Ai chatbots upskill [00:07:30] people and help them create outputs that are closer to average or above average. So if you are a, say, a below average writer, and you use AI to improve your writing a tool like just a chatbot, Claude or Grammarly, your emails are going to get way better. But if you're already a CFO who knows how to write those emails, it's not going to help you much. It might even make it worse. So we're going about it backwards. We should really be giving these tools to the staff, to the to the junior staff especially. [00:08:00]

David Leary: [00:08:00] Could that just be like where the market is, because ultimately the CFO is going to eventually make a buy decision on some tools. And we've talked we've met people at, uh, Reddit. We've met some of those accountants team, and they were like engineers. Their job is to build tools for the accounting team at bigger company. And I think we met. He was on the podcast. He was an accountant who managed a team of engineers at Amazon to build better tools for the accountants at the internal team at Amazon. So these bigger companies, maybe that's where this is falling in at. It's the C, [00:08:30] the CFO who's in his, his or hers engineering teams really working with this stuff and the like, Blake said. The end users, the front end employees that are actually doing the work just aren't getting the benefit yet or utilizing it.

Adam Zaki: [00:08:43] And, you know, I think I think there's that and I think there's also a bit of a sense of paranoia. No CFO wants to be left behind when you hear about this, like life changing technology coming in. You know, nobody wants to be left out of the loop. So if there's resources available, the CFO wants us as much [00:09:00] as they can get just for their own careers, let alone for the company. And so I think some of that plays into it's greedy.

Blake Oliver: [00:09:05] It's AI FOMO. Right. It's it's uh, it's like we had we had crypto FOMO. Now we have AI, FOMO. Well, let's talk about what we can actually use AI for. Uh, not maybe specific applications, but like the problems it could solve. And that big problem that I hear about is the talent shortage. We talk about it all the time on our show. Uh, it's one of our most popular topics. And we know that it's [00:09:30] affecting finance teams and CFOs as well. What is the state of the, uh, talent shortage in corporate finance? Adam?

Adam Zaki: [00:09:39] You know, I think it's gotten a little bit better over the past year with these types of tools coming into play, like we said, at these larger companies. So we're starting to use them. But I think overall, you know, we spoke about it a little bit before we hit record was that, you know, there's a poor perception of the final stage of a career in finance and accounting. Right. Uh, when I was [00:10:00] in college, my perception of accounting was, oh, you're just going to go slog your life away at Deloitte or PwC and, you know, go work 100 hours a week. But but that's not necessarily the case. And I've learned that working at CFO, that you can become a CFO in an industry or at a company that you like, you could be like you guys who are thought leaders and create a company doing that and providing CPE credits in this space. Those are just two examples of a wide variety of careers that are available for people that pursue finance [00:10:30] and accounting. And, and I think that message has been poorly relayed. And I don't know who that falls on whose responsibility that is. I'm not sure. But, you know, when I spoke to Erica Williams, the chair of the PCAOB, you know, she she made a great point when she said that I think the biggest problem with this is that these companies just don't want to pay. I think we need to pay accountants more. It's as simple as that. If you pay more, smarter people will go in and pursue those careers. But right now, an extra year of college to go and make maybe [00:11:00] $100,000 a year to start out, go sell cars, um, you can go put in 150 hours learning how to sell cars and go make $100,000 a year, you know, and it's really it's really just up to that. I believe it comes down to compensation. Cfo compensation is very high. Accountant compensation is very low.

Blake Oliver: [00:11:18] You mentioned the 150 hour rule, the fifth year of education required to become a CPA. What do CFOs think about 150?

Adam Zaki: [00:11:27] You know, I've gotten mixed answers on this. I did. We run a series [00:11:30] called A Peer Audit. And what I do is I go out there and I survey like seven CFOs, and I asked them the same question, and we ran a story. We ran a peer audit that covered this. And I think that they're hesitant to hire an accountant that doesn't have the 150 hour requirement. Right? I think there's there's definitely a mindset where I don't want to be the first to go out there and bring on members of my team that don't have these requirements. But I think there also is a consensus that it doesn't really do [00:12:00] much right. The VP of finance for the Savannah Bananas gave me, which, by the way, if you haven't heard the best benefits.

Blake Oliver: [00:12:07] Best Instagram Reels on Instagram TikTok.

Adam Zaki: [00:12:11] And if you can get the VP of finance on here is a great guy. He actually teaches finance and accounting at the Savannah College of Art and design.

David Leary: [00:12:18] Somebody has to make this introduction for us. We got to get him on the show for sure.

Adam Zaki: [00:12:22] Because he really is a great guy. But, you know, he made a great point where I think the whole process is kind of dismantled [00:12:30] and it needs to be rebuilt, and we spoke a lot about that. But my concern is that if we take away the 150 hour requirement, what do we say to the people that are doing it now or just just met it? You know, I think there needs to be some type of cooling off period if this change is to be made. But but the the details of that, I don't know how to put that together. I don't know how that be possible. But if you took away the 150 hour requirement tomorrow, and I think a lot of CFOs would agree with this, it would piss off a lot of people, [00:13:00] because there are people that just satisfied this requirement. And there are so many people that worked so hard to satisfy the requirement that if you just took it away, it would it would upset people. It would.

David Leary: [00:13:10] I suspect they're already upset because most of the people they work with were CPAs, didn't have to do it to begin with, so they're probably already upset.

Blake Oliver: [00:13:19] Well, uh, we're talking about the talent shortage. And part of the problem is the, uh, the Gen Z, the Gen Z generation that doesn't want [00:13:30] to work the long hours. Uh, how is Gen Z fitting in to the profession? In industry? Adam, when you talk to CFOs, like what works, what doesn't?

Adam Zaki: [00:13:42] Well, you know, they get a bad rep. We all know that, right? Gen Z is killed in the media, and I try, you know, I, I speak to a lot of Gen Z consultants. There's a few of them, these Gen Z consulting firms, and they're great sources to me. And I speak to them frequently. And I think like any other generation, Gen Z has [00:14:00] very, very intelligent, potentially successful people within it. There are a lot of young, smart people out there. However, those young, smart people are pursuing entrepreneurship. Now they want to start businesses. They want to be social media influencers. There there are people that would have pursued finance and accounting years ago that are not because they they see other opportunities that are available to them. How how are they blending in? Like I said, there are plenty of young [00:14:30] people that are working in finance and accounting right now that are doing a great job. But, you know, a great source of mine is a recruiter for tax at one of the big four firms. Never comes on the record. We grew up together, but we talk all the time about his job, right? And he always tells me these jobs are yours to have. Once you get the internship, you have to screw it up not to get the job right, to work for one of these big four firms. And I think there's a lot to be said about that. When Gen Z goes out [00:15:00] and pursues these careers, it's accounting. And finance is one of the only few areas where you can kind of guarantee yourself a job. And I think the smart people, the B plus A minus students realize that and they go to accounting. But it's the A plus. Students that pursue the consulting medicine, those things. So the smartest of the smart of Gen Z, I don't believe are pursuing finance and accounting, but the mid-range.

Blake Oliver: [00:15:27] Are you right about the foosball [00:15:30] table fallacy? Tell us about the foosball table fallacy.

Adam Zaki: [00:15:34] Well, there's a great term out there as well that I didn't come up with called Office Peacocking. Right. And and to be an office peacock is to have your high school diploma at your desk with ten pictures of your kids and a picture of your dog and a stuffed animal. And it's a kind of play up the office. Right. And and I think the foosball table fallacy plays into that, where Gen Z does not want to go into an office because there's a pool table [00:16:00] there, and they don't want to go into an office because they have an espresso machine. You know, I think those things sound good in a boardroom. And when there's a bunch of people sitting around a table going, hey, how do we make people want to come into the office? Those ideas sound good in theory, but Gen Z has a great sense of BS, and I find that a lot in the people that I interview, right? That they have a keen for authenticity. And I think if you want people to come to the office, you need to create an authentic environment, whether that means it's [00:16:30] easy to get to there's quiet workspaces, it's comfortable. It's not on a five day a week cadence. There's some autonomy in there. But just to throw a foosball table in there like we call it CFO, the foosball table fallacy, it doesn't work. And I think, you know, as I'm a millennial, I'm I'll be 30 in August. And even for me, like, I know some people my age that maybe years ago, before Covid would have liked to play a little foosball in the office. Right? But Gen Z doesn't buy that. And if you [00:17:00] want young people to come to the office, that's not the way to do it.

Blake Oliver: [00:17:02] So I think David was going to ask the question, what does work?

David Leary: [00:17:05] Well, I was going to ask that like what? You know, there's a lot of arguments that. In office remote hybrid. Like when you talk to CFOs, what are their opinions for their teams? Their finance teams forget their their entire company. But where do where do CFOs want their finance teams? How do they want to work?

Adam Zaki: [00:17:21] Well, many CFOs that I talk to have been at their companies in, in, in the post-Covid world. Right. Few CFOs stay in their roles three, [00:17:30] four years longer than that. And so a lot of CFOs now are companies where, you know, they've only been there post Covid in this remote working environment. So it's very difficult to come in and make a change. You know, if you step into a company and they're on a three day a week or some type of hybrid schedule or they're fully remote to make that change is like culture suicide. And many CFOs do not want to do that. They don't want to, you know, be the bad guy. And I think CEOs would agree the entire executive team does not want to, you know, be marginalized [00:18:00] for saying, hey, we have to come into the office. But I think what works is that if you want to put some type of change in, the executives need to be there. If the CFO says you need to be in the office three days a week, the CFO should be there too, and everybody should be working together. I find that some CFOs, when they when they want to change their work environments, they want to do it drastically. Right? Like starting on this day, we're going to make this change. And I think there needs to be autonomy in that decision. I think you can encourage [00:18:30] people to go in at their own pace, and once there's a pattern of people going into the office, then you can say, hey, we're already all here once a week. Why don't we make it twice a week? And if it's gradual, I think that will work just to make a change overnight. People don't want to do that. You guys work for yourselves. You guys don't have a boss. But you did when your boss made a change. That would change the way that your entire job works overnight. That would really stink. And I think a lot of people resonate with that and say, I don't want to deal with that.

Blake Oliver: [00:18:59] Well, this [00:19:00] is all related to the talent shortage because if you do that change, suddenly you will find a lot of people might leave and that might be deliberate. Right? We've we've seen companies do this, and maybe it's really a strategy just to create some attrition. So you don't have to lay people off. They leave if they don't want to come into the office. You write about the breakdown of financial controls due to the talent shortage, and that's some of the most fascinating writing I read on CFO, because [00:19:30] it's a real impact. We are seeing companies, uh, be unable to issue their financial statements on time. And these are public companies, and that's a big no no. Can you give some examples for our listeners of the real world consequences of not having enough accountants in the profession?

Adam Zaki: [00:19:48] I mean, I would I would Google the word Detroit CFO right now. Detroit CFO the Detroit Riverfront Conservancy CFO was just, I believe. Isn't [00:20:00] what the FBI is investigating him. I'm not sure. I wasn't the one who covered the story fully. My my coworker Andy Burke did, but the guy stole $40 million over the course of a decade. And. And just that is such an example of what? Failure. What failure financial. Of what failure financial controls can do over time. Now, it's not just one instance. You know, a failure over time can be detrimental and can really go unnoticed. When a CFO kind of calls the shots. [00:20:30] Like, for example, this Detroit guy used the same auditor for ten years. He's supposed to change every 3 or 4 years. From my understanding, that's like ethically the best practice. But this guy did not. And it's a little things like that. Those are little failures of financial controls that add up to big failures. Right? I just met with the CFO of Quincy, Massachusetts, the city of Quincy. Great guy, 31 years old. He's an economist. Didn't even take an accounting course after second year of college. Right. Not [00:21:00] an accountant by any means. Got the job during Covid. It's been there for four years. Another guest that would be fascinating for the show for you guys.

Adam Zaki: [00:21:07] But, you know, he's in the midst of an FBI investigation right now and I don't know too many details about it. He didn't really want to go too much into it, but it has to do with his retirement funding for the city or something like that. But we did talk about is the cybersecurity and how it's not about setting the trap to to catch the fraud, right? [00:21:30] It's about setting the processes in place to prevent that from ever happening, and being proactive in cybersecurity just to buy a good cybersecurity tool or just to pay somebody to audit and see if there's any crime. That's like a last ditch effort, like it's about being proactive when it comes to this stuff. And that's really the case here. And if if talent, if there's a lack of talent, then those looking for the crime and those doing the crime makes it harder for [00:22:00] those looking forward and easier for those doing it. Because, you know, the detectives are not as good as their job and it's easier to get away with the crime. And so I think failure of financial controls when it comes to talent is huge. If, if, if the talent level is down, it's easier to get away with stuff.

David Leary: [00:22:17] And the failure of not having controls. It's not even just about fraud. I mean, I see I'm, I'm going to send them all to you. And I see these stories come through Adam and let you compile it together over and over again. It's a school district here. It's a city here. I just think [00:22:30] in Sydney, Australia, there, um, subway system or something, $1 billion. They overstay the revenue. You know, there's just controls where transactions aren't getting recorded properly. And the next thing you know, they have budget problems, have to cut school district lays off half their teachers because they've been, you know, double booking the revenue for two years because of the financial controls aren't there and nobody's looking at it. And it all probably ties back to the not enough bodies, right?

Adam Zaki: [00:22:54] Yeah, I think so. And I don't know if there's necessarily a technology tool to fix this, right? I mean. [00:23:00]

Blake Oliver: [00:23:00] Well, that's the promise of AI, right? Is hopefully we can address some of this talent shortage with using AI tools to, to to put in proper internal controls and organizations that don't have people to do it. But we're really early with all of these chat bots, and it's going to take a while for these AI agents to develop that can actually do that, like reconcile a clearing account. I mean, David and I were just talking in our last episode about this whole synapse bankruptcy [00:23:30] and how that has caused havoc in the fintech world, you know, here in the States, because essentially they weren't reconciling a clearing account, and it got out of control and nobody could get their arms around it. And eventually it led to a discrepancy of how many millions of dollars.

David Leary: [00:23:46] David, 85 million has just gone. And apparently I learned today that they were co-mingling funds as well. It's just like simple accounting 101 they couldn't execute on.

Blake Oliver: [00:23:55] You know, it gets out of control like you said, Adam. Right. Like it spirals over [00:24:00] years. And it's a problem that nobody's aware of until it becomes a problem everybody's aware of. So that's my fear is that, you know, do we have another Enron lurking in the economy? And it's because we don't have internal controls, and we don't have enough auditors who are watching this. That that is my big fear. And maybe, maybe I'm just extra cognizant of that having like grown up in the post Enron world. Like I was very aware of that when it happened. But just [00:24:30] because it hasn't happened for 20 years doesn't mean it couldn't happen again, right?

Adam Zaki: [00:24:35] I agree with you, and I don't think it's a question of resources. Right before we talked about smaller companies versus larger companies having the resources to use AI. I mean, even when you turn to sports, right? Failure of financial controls when it comes to Shohei Ohtani, I mean, with the whole gambling thing, I mean, how do you not keep track of the amount of money that was going out of his accounts for, for gambling? How is there not somebody? I mean, I think there was where was the.

Blake Oliver: [00:24:59] This manager is the [00:25:00] question I asked. Like, these guys all have business managers, you know, there's the accountant.

Adam Zaki: [00:25:04] There's a very interesting part of that story that did not get publicized. Only us at CFO covered it. I wrote the story where the day that came out, ESPN had interviewed. Ohtani's interpreter on camera about the event for a 45 minute interview and never released it. The interview is not out there, but they wrote that they put this together. It's actually a LinkedIn the story that I covered about Ohtani. So his take is out there. Things change [00:25:30] very quickly after all that happened. And I don't know how much of, you know, we can, you know, talk about the back doors of baseball and what goes on behind the scenes, right. But I think some of that has to be said when it comes to this. I don't know if that situation was a classic case of failure, of financial controls, but I do think that there's an element of that just, you know, that's the biggest star in sports. And nobody was tracking his money. Well, how does that happen?

David Leary: [00:25:54] What's interesting about that? He had all these financial, um, advisors because he negotiated [00:26:00] a very interesting, never done before baseball contract that deferred revenue.

Blake Oliver: [00:26:04] Deferring the revenue.

David Leary: [00:26:05] And then the day to day finances. Apparently he didn't get any help on that or supervision. It's really hard to reconcile that in my brain.

Blake Oliver: [00:26:13] Yeah.

Adam Zaki: [00:26:14] And that's what makes finance and accounting so interesting. Right? I think those are the things that we need to showcase to young people is like, hey, you can go into forensic accounting and look into Shohei Ohtani's finances. That's a cool gig. But I don't think people know that that's the case. I really don't.

Blake Oliver: [00:26:29] Know. [00:26:30] When I talk to students, they say their professors really only promote generally. And this is not all professors or accounting lecturers, but they promote the traditional path. Go work for a big firm and audit or tax, which to me is not appealing in the slightest. Right. And I think most people are finding that less and less appealing, especially when the hours are so awful. So we got to make people more aware of paths into [00:27:00] industry. I actually I saw a story recently, I don't know if this was a CFO story about how AT&T is starting to bypass Big Four for recruitment and going direct to colleges and recruiting directly out of school to fill their ranks because it's not working for them the other way. So maybe we'll see more. Accountants go straight from school into corporate finance.

Adam Zaki: [00:27:26] I'd love to ask you guys, when you were young, early [00:27:30] on in your careers, was CFO a goal? Like, was it ever to you guys to be like, you know what, I'd love to be a CFO one day. Or was it to make partner at a big four firm? What came to mind first?

Blake Oliver: [00:27:40] Well, I'm a nontraditional accountant. I was a musician, so CFO was not on my on my list of. I think the first thing I wanted to be was an astronaut. But if I, if I sort of put myself back into that. Like, let's say if I, if I imagine I'm an accounting student, to me, CFO [00:28:00] is the most glamorous role you can have running finance for a fast growing company or something. Even just a big company like that is a really cool role. What about you, David?

David Leary: [00:28:12] Yeah, I think, I mean, I when I was in college, it was uh, and I was going to major in accounting. It was big seven, I think, at the time. But like the concept, if I remember, like going back to being that age, this concept of you didn't even know what an accounting partner was at a firm like that that didn't even exist in your brain. But you knew what a CFO was, right? [00:28:30] But it's kind of interesting that somehow the you're aware of CFOs, but everybody gets pushed. But I know why the they'd have these mixers and the big seven was at all these mixers, you know, for the accounting club and all that. But you know, industry wasn't there. Right. So.

Blake Oliver: [00:28:46] Adam, I don't know if that answers your question, but we also want to give you the opportunity to ask your questions of us. We're going to turn the tables and and so so go ahead. You are now the interviewer. [00:29:00] Okay. What what what what questions do you have for us?

Adam Zaki: [00:29:04] Well thank you. Um, you know, first of all, a question that we posed to our readers that we're waiting. So we were off, um, for Wednesday for Juneteenth. So we published survey survey results in our newsletters once a week every Wednesday. So these survey results will be out this upcoming Wednesday. Is what either one of you trade your current role for the CFO gig at Google or OpenAI, because these [00:29:30] are two of the most difficult jobs available to CFOs out there right now. Two companies growing in dramatically different ways, with lots of politics going on inside of both of them. It's a big challenge, but also a big paycheck. So what do you guys think?

Blake Oliver: [00:29:48] I'll let David go first.

David Leary: [00:29:50] I will say no. Right now, after doing 22 years at a big, huge corporation, I've just I like the way what we've built and what we're doing now at earmark, I'm going to say, no, I will not be.

Blake Oliver: [00:29:59] Like the startup, [00:30:00] the small startups. It is fun. Um, David and I have a lot of fun we've been doing earmark for. It's been going on three years now, really since the very beginning. And David joined me officially last year. Um, my answer is no, but not because I wouldn't find it fascinating assuming that I had the capability to do this job right. But I know that it would just take all of my time. And for me, the thing I love about accounting the most is the opportunity to have a very, [00:30:30] very flexible lifestyle so I can live very comfortably here in Arizona, a low cost, relatively low cost state, and I, I can work when I want and how much I want, and I can and I can afford to live. And maybe that's just coming from California where I felt like I had to hustle just to, you know, get by. Uh, but I really, really like, at this point in my life, having a kid, being able to say, I'm just going to work in the mornings and [00:31:00] be able to, like, have that lifestyle kind of job, not talk a lot.

Adam Zaki: [00:31:05] About work life balance. I think that's what you're getting at. Yeah, and you're right.

Blake Oliver: [00:31:10] And that's the thing that. Accounting rules can offer is that if we could just get our minds around that in the profession, that you don't have to work 12 hour days to be successful, or that it's possible to create flexible roles for people? Um, you know, I meet I meet so many [00:31:30] accountants, e CPAs, just accountants, bookkeepers who are moms who got pushed out of public accounting or industry because they needed flexibility and they couldn't get it and it wouldn't have taken that much. For these teams to keep them on the team, for their managers to say, okay, it's okay if you leave at three, just get your job done. You don't have to bill all these hours. We can figure out another way to do it. And a lot of times if [00:32:00] you want to stick around, the only option is you take a massive pay cut and you still have to do the same amount of work, which seems completely unfair. So, you know, I really sympathize with that.

Adam Zaki: [00:32:12] How about, you know, we spoke about 150 hour rule. And if you if we took away the requirements, what would happen to the people working on it? But is there any let's say that was off the table. We have to keep the 150 hour rule. Yeah. What's the other answer? Is there something else? Because lately I feel like this 150 [00:32:30] hour requirement change is the only solution that people are coming up with to fix this problem. What other solutions do you think are out there if this was not to be changed?

Blake Oliver: [00:32:41] Well, first I want to say that according to my research, which I haven't done a ton of it, but I've talked to some people who are very knowledgeable about the laws in a variety of states Minnesota, South Carolina, here in Arizona. I don't think that 150 affects CPAs working in industry at all. [00:33:00] Like their job function would not change mobility. This whole mobility issue would actually not matter because CPAs and industry are. As far as I can tell, there's no state that actually regulates them. It's all people in public accounting. So we don't have to actually worry about this mobility problem in industry. And that's a fallacy. And anyone who's saying that, I know there are people at the AICPA who claim that there would be problems I cannot printed.

David Leary: [00:33:26] It was printed. I remember it was printed. Yeah.

Blake Oliver: [00:33:28] Actually, uh, an [00:33:30] AICPA executive wrote an opinion piece in CFO dive and, and claimed that this would affect CFOs and their teams, and I cannot find an example of it. And I asked the AICPA for examples and they could not provide them. I don't think it is. It exists. So. That's one thing I think we need to get straight 150 and changes to it and mobility issues. They don't affect CPAs working in industry. Maybe your [00:34:00] LinkedIn profile, you know, a state could come after you and say you can't use CPA on your LinkedIn profile or something because you are not. You're living here and you're not licensed here, whatever. A big deal. You can still do your job in terms of like, so your question was about like, what do we what do we do about it? Like, what's the solution.

Adam Zaki: [00:34:20] If the 150 hour rules exactly where it is now? Yeah. What's the next step? What do we do?

Blake Oliver: [00:34:26] Well, so to me, um. I [00:34:30] think that it would actually be fairly simple if the national leadership got on board to to create an alternative pathway so you don't get rid of 150. You just say, look, if you don't want to do 150 hours, you can do 120 and you can get two years of work experience. And that's what Minnesota is working to do. That's what some other states are are trying to do. And we can overcome the mobility issues. My argument about this mobility thing is that [00:35:00] because of remote work, firms can just hire people with the right licenses in the right states if they need them. It's it's not the issue that it used to be, right, 20, 30, 40 years ago. It was a huge hassle because you had to have everybody working say, here in Phoenix and your Phoenix firm, and if you wanted to do New Mexico audits, like you had to have that mobility, right? The ability to use your Arizona license in New Mexico. But now you could just go hire some people in Albuquerque and let them work remotely. So I don't think it's I think it's like a non-issue. [00:35:30] I think the solution is to immediately get rid of it. And when you look at surveys of CPAs, right, you ask them what they think 80% are in favor of making a change. At the state level. There's, there's a we've got we've got the supermajority on board. The people that are not on board are the leaders often who are have been around for such a long time. They were the people who put that rule in place. And I think that's the problem is they can't admit they made a mistake. [00:36:00] Or perhaps that the the solution that they created was for a problem that doesn't exist anymore and has now created problems of its own.

Adam Zaki: [00:36:09] David. Any thoughts?

David Leary: [00:36:11] I mean, I think if they don't change it, you're not going to see change. Like ultimately. Right. That's a quote. Like like it's just going to be the same. Everything's going to stay the same.

Blake Oliver: [00:36:21] You know what? You know what the profession needs a CFO putting together a dashboard with all the metrics. And if we did that, they'd all be pointing down. [00:36:30] Right? The number of CPAs licensed every year is going down. The number of CPAs who are CFOs is going down. The number of accounting students is going down. The people who say they want to be accounting students is going down. The only thing that's going up is the number of people leaving the public accounting, which is not where we want it to go. Right. So everything is going in the wrong direction. We got to do something is my view. And this is a very simple thing and it has broad support. So we're seeing we're [00:37:00] seeing progress being made. But gosh it is just so slow. These state boards of accountancy.

Adam Zaki: [00:37:05] Do you think it's fair. Do you think these. Do you think entry level CPAs need a raise?

Blake Oliver: [00:37:10] Uh oh. In compensation? Yes. Well, so I think the firms get unfairly blamed for this, uh, because we say, uh, you know, like, the firms should just pay more. But the problem is that a single firm can't make this change on its own without directly impacting partner compensation, [00:37:30] and that puts them at a disadvantage versus other firms. So all the firms have to either get together and do it together, or we need to increase the value of these young graduates. So I would put the blame at the foot of the educational institutions. If you think about it. Right, the pay, the starting pay of an accountant is indicative of their value when they come out of school. And if the pay is low, that indicates low value. [00:38:00] And I think a lot of schools have failed to prepare accountants for the world of work. They don't know anything. That's I mean, that's I'm being a bit facetious, but you ask like a small firm partner, like. Can can a young accountant coming out of accounting school with an accounting degree do anything in your firm? And the answer is pretty much no.

Blake Oliver: [00:38:22] I got to train them how to do everything because the education is so theoretical. There's very little practical education. I [00:38:30] was lucky because I was working while I was in school, so I was able to apply the theory I learned in the real world. I don't know how these students who don't have that experience working. Are learning anything. Accounting is a profession that is based on practical expertise, and the education is all in the classroom for a lot of these kids. And I think that's why the starting salaries are low. If colleges actually taught students how to do a tax return in school. Like [00:39:00] the software to use how to actually like push one through, get one done. They'd be a lot more valuable to a small firm when they graduate. And same thing for creating financial statements. A lot of these students graduated. They have never put together a set of financial statements except in theory. So. I think that it's traditional education that is the problem, and the accounting curriculum has not really changed much in decades.

David Leary: [00:39:27] But I think CFOs have to have. [00:39:30] They need. To accounting firms? Yes, need to pay accounting graduates more money, but that means somebody has to value the work they're doing, which is essentially the audits. And CFOs work for these big companies in the boards. And the CFOs probably have some input on these contracts to get awarded. And what do they always do? You choose the lowest bidder. And so so CFO chooses the lowest bidder. The lowest bidder pays the employees. Not a lot. Those employees quit accounting entirely. Now the CFO doesn't have any staff to hire. And [00:40:00] so you have this cycle happening where ultimately the CFOs are contributing to the problem, to the.

Blake Oliver: [00:40:06] Commodity not paying.

David Leary: [00:40:07] For the audits.

Blake Oliver: [00:40:07] The commoditization of audits. Yeah, yeah. Has devalued audit, which lowers audit salaries. That's what you're saying David. Yeah. Totally agree. And then when.

David Leary: [00:40:15] People leave accounting entirely now CFOs can't hire people on their internal teams because these people have left accounting. They're not leaving public accounting to go into industry. They're leaving the field entirely. And that's the bigger issue.

Blake Oliver: [00:40:27] That's true.

Adam Zaki: [00:40:28] Stepped into this space one of the most. [00:40:30] I learned a lot, right. But one of the most shocking things that I learned was that public companies can choose their own auditors. And I know that you guys have spoken about this a lot on your show, but from an outsider coming in, that was the most mind blowing thing to me. And Blake. I think the way you put it, it's like a restaurant coming in and choosing their health inspector. Yes, that's exactly it. And I think there's a lot of that to be said in how this all works. And, you know, when you step in as an outsider, some of the [00:41:00] ways that these things work in finance and accounting, you go, wait, what? And I think now with technology, I think a lot of this can be remedied.

Blake Oliver: [00:41:09] Well, the choosing your own auditor would work if we actually had proper enforcement of auditing standards. But the problem is that it's very easy, as we saw in the case of BF Borgers, to do really, really bad audits for years and years and years and suffer no consequences. And, and I just saw a story about how [00:41:30] most of BF Borgers clients, this is the audit firm that was doing sham audits. The SEC came out with a case against BF Borgers and basically said, you can't do public audits anymore because you're faking them. They accuse them of completely faking work. Papers like this is a total sham audit firm. They were doing audits for like 120 public companies for years and years, including Trump's Spac Truthsocial. So now all [00:42:00] of these companies have to go get new auditors, 70 still can't get them. And one of the reasons is that BF Borgers was low balling on audit fees 2 to 3 times less than what other firms are quoting. So when you have lax enforcement of audit standards and firms like this are allowed to exist, and I am willing to bet money that there are more of them, it drives fees down. Right? Because the honest auditors, the good auditors, can't compete with these low ball fake audits. [00:42:30] And that lowers salaries in the profession. So we got to do something. If firms get to pick their own auditors, we got to have some independent third party that's making sure that these audits are actually well done, which is very challenging. Or maybe we switch up the model and we incentivize the auditors to be more like investigators. And those people cannot be hired by the clients. They've got to be hired by some other agency [00:43:00] and given autonomy. So they don't have this financial incentive to do low quality work and to not really look into the problems.

Adam Zaki: [00:43:09] I think that would be I think that's just a little difficult, only because a lot of CFOs that I talked to when they when we talk about career, a lot of them, especially who came from Big Four said, oh, I have this company as a client. And they hired me after I was done working with them. And so there's an incentive if you get a client that you like, you know, in your brain, in the back of your mind, you can go, [00:43:30] this person might hire me.

Blake Oliver: [00:43:32] When I talk to young auditors and they want to get out of audit, I say, that's how you do it. I've all the auditors I know who ended up in good industry positions, got a job at the client.

David Leary: [00:43:43] You're right. And if you throw the client under the bus, you're probably not going to. You've just eliminated a job opportunity, right?

Adam Zaki: [00:43:49] And from an outsider looking in as a journalist, like I said, it was not a CPA. And who learned this industry from a media perspective? That's funny to me. And I've always thought that's [00:44:00] a little funny. But like I said, there's a lot of things within finance and accounting where it's just a little quirky and hopefully AI is the remedy that.

Blake Oliver: [00:44:08] Hopefully it could be. The other remedy is that the business model somehow comes crashing down with another Enron, right? Because that's that sort of thing is what actually gets changed to happen, right? Like the accounting profession as it currently exists? It's only been since like the Great Depression, which is really not that long. Right? We're talking like 100 years. [00:44:30] So. Hopefully that's not what it takes, but I could see that being what it takes. And maybe it takes decades for that eventually to happen, because there's just so much about the business model that's entrenched, like you said, the way that people get jobs. If nobody wants to shake that up the way that auditors get paid, no audit partner wants to shake that up and risk their compensation, their income. They work so hard to get there. [00:45:00] And there's a lot of really honest people. So it's not their fault that the system is set up in a way that incentivizes bad actors. And unfortunately, there's enough bad actors to cause some serious problems. So it's a really, really challenging problem. And I do sympathize with the leaders at the PCAOB, at the AICPA, at Nasba, who have to deal with it, because it's not an easy solution. But I also feel like a [00:45:30] lot of them are just business as usual. Let's keep it going as long as possible, and they're part of the problem because of that. So but you know, I as an outsider, I get to sit here and opine in my armchair. I don't have to deal with it. So.

Adam Zaki: [00:45:44] I mean, she has one final question here. Yeah. Yeah. A lot of CFOs have trouble being approachable, especially when they step into a new role at a bigger company. Right. If you oversee, if you go from overseeing a company of 250 people to a company of 1200, it's very hard to introduce yourself to everybody. [00:46:00] So as young accountants coming up in your careers, when you interacted with CFOs or even any type of leadership, what do you remember from the good ones, the nice ones, the ones that made an impact on you? Because a lot of CFOs want to be that person. They want to be the leader in the room that, you know, their team remembers after they leave the company, but they don't know how. And when I go to these events, that's a topic of conversation for the keynotes, even, too. It's like, how do I become more approachable among [00:46:30] my team? How do I not just be, you know, the scary CFO in the corner with the big glass office without being, well, well, still being a CFO, you know, how do you how do I balance that? How do I be the boss while also being a good leader?

David Leary: [00:46:46] I wonder if it's harder now with it being virtual, because I think if I think about I mean, obviously I never worked as a controller, I never worked for a company like that. But I think about bosses I worked for in tech. The best ones really came out of our office. We went and got a coffee. [00:47:00] We'd leave the campus right, or go somewhere else to sit down. We have a coffee. Maybe the plan really was on a napkin. Like I remember, like some of the best development plans I had in my career were three senses on a napkin. We took a photo of it, and then we would just pull up that photo for the reviews and see where I'm at. But the keeping it less formal is probably the most approachable and probably influences people even more.

Adam Zaki: [00:47:23] I agree.

Blake Oliver: [00:47:24] So I've had two really memorable mentors. Bosses [00:47:30] two. In my career, and I suppose I think of them as mentors before I think of them as bosses. And the first was Bruce, who acquired my accounting firm into his CPA firm and. We became friends before we became business partners and became my boss. Uh, we met at a conference, and he sort of took me under his wing, and. Taught me what I needed to know in order to be successful, and then was very honest [00:48:00] and open with me when we did the transaction. And for that I'm really grateful. It's really scary when you are building a business and selling a business and merging in a business, because there's so many ways people can take advantage of you, and to find somebody that you feel trust with is is really key. So I guess just being being a manager or a leader who people feel like they can trust is really important. How do you do that? I'm not really sure. Um, I try to do it just by [00:48:30] being open with people and honest and not hiding. The big challenges that I'm having and the questions that I have and the worries that I have. Right. I talk honestly about that at earmark, and we have a lot of challenges. So I try to include as many people as possible in that. So I'm not just sitting in my office dealing with it on my own, which is great for me too, right? Because I get it off my chest, I get to I get the feedback. David knows what I'm talking about.

David Leary: [00:48:56] I have a counseling bill. One day I'm going to send you. Yeah, don't worry about it.

Blake Oliver: [00:48:59] So [00:49:00] I kind of use my team, actually, as like like I don't need to be the strong leader who keeps everything bottled up inside. I need to share that with them, especially in a remote environment. Um, the other great mentor I had was Win Win White, the CMO at Floqast when I worked there, and he just was so good at teaching me he would he would try to like, teach me everything he knew when we were working together on [00:49:30] how to run marketing at a tech company, which I'd never I'd never even worked in a tech company. I'd never worked in marketing before. Like I was just the product marketer. I was the CPA on the team, and he brought me in, um, and he taught me so much about demand generation and SEO and and the funnel and all this stuff that's actually really analytical. And he was able to kind of teach it to me in a way that an accountant could understand, because in the end, marketing is just numbers, right? It's about taking somebody on your [00:50:00] website and turning them into a customer. Through a funnel with conversion rates. And that all turns out as revenue in the financial statements. It's all connected. And he was really good at showing me that. So maybe the answer is like like figuring out where your people are with their knowledge and then figuring out how to bridge that, that gap. And for me, I love learning. And yeah, if you can upskill your people. That's the best thing you can do for them.

Adam Zaki: [00:50:29] You know, I think we touched [00:50:30] about it in the beginning is I think Gen Z's got a great point about work environment, right? Is I think it comes down to authenticity. Yeah. If the foosball table fallacy. Right. I think, yeah. If you could take that element out of the office and create an environment where people want to learn and are encouraged to work hard through, you know, an environment that's dominated by meritocracy and a good culture and all those things that we talk about. But I think the CFO, and it's part of the reason why I love covering the space is now I get to talk to some of the smartest, brightest people in the world on a daily [00:51:00] basis. But a lot of them are type A and a lot of them, you know it, finance and accounting people, a lot of them are not socialites. You know, it takes a lot of time to get that degree and a lot of coffee, a lot of hours in a coffee shop, you know, sitting behind a computer, not talking to anybody, studying for four years, you know, and that shows and I think once you become a leader, nobody teaches you how to be a leader of people. They teach you how to lead companies and lead operations. And so I think that's a big [00:51:30] part of the CFO role that needs guidance is how do I be a better people person. And I agree with both of you. I think it comes down to this idea of creating authentic workplace, I really do, yeah.

Blake Oliver: [00:51:41] Authenticity is is really the word of think of the last decade and. We have social media to thank for that. It's it's now not possible. Let me put it this way. In the Mad Men era, you could have two lives. You could have your personal life [00:52:00] and your work life. And they could be completely different. And now that's not possible anymore. And I think that creates a lot of challenges in accounting because there's a lot of people. For whom they haven't adapted to that change. Right. You. And especially at the big four. Right. You put on the suit and the tie and you become like a different person in the office. And that's not what people want.

David Leary: [00:52:27] You know, and if you think about like, so much of social media feels [00:52:30] fake, it feels manufactured, like, yeah, you would hope, well, at least at work I'm going to have an authentic experience. But sometimes that's not true either. And I think maybe that that that's an opportunity right to if you can provide authentic experiences at your company or your accounting firm, that's huge.

Blake Oliver: [00:52:46] So the lesson is. Don't put the foosball table in your office. Create. It workspace where people can be themselves.

Adam Zaki: [00:52:57] Exactly right.

Blake Oliver: [00:52:59] I think that's a [00:53:00] great way to wrap this episode. Adam. We had you on and we thought it was going to be 20 minutes and we recorded a full episode. This was great. It's like a Rogan podcast.

Adam Zaki: [00:53:09] This is great.

Blake Oliver: [00:53:10] We have to go three hours for that, right? No, I've been listening to Lex Fridman. Great, I love Lex. It's really tough, though, to get through every episode. It's a it's like I'm like, okay, I'm like 80% there. Gotta finish it. That's a lot of I got to work out more or something where I can listen to walking on the treadmill.

Adam Zaki: [00:53:28] That's how I get my podcast.

Blake Oliver: [00:53:29] That's what I need [00:53:30] to do. See, I, I swim now because it's summertime here and I haven't invested in, like, the underwater earbud thing. It's too complicated, you know.

David Leary: [00:53:40] You can always buy gadgets. This makes no sense. You love buying gadgets. That's the thing.

Blake Oliver: [00:53:44] Yeah. Yeah. They have these like underwater, waterproof, like, uh, they, they don't even like plug into your ear. They go through like the bone. It's like bone. They vibrate on the outside of your head and the sound goes in that way. It's kind of neat. Yeah. Anyway, [00:54:00] I haven't bought some yet because I know that if I do, I probably won't use them. Right? I'm trying to trying to, like, have less electronic waste in my life.

Adam Zaki: [00:54:08] Well, when you get them, I'll come back on and we can do a nice product review. How about.

Blake Oliver: [00:54:11] That? All right. I'll be in the pool when we do it. Great. Awesome, guys.

Adam Zaki: [00:54:16] Thank you very, very much. This has been great. And I can't compliment you enough. Really, the two of you. Like I said, I'm not a CPA. I learn about this stuff every single day more and more. And you two have been a tremendous resource to me. So thank you for thank you.

Blake Oliver: [00:54:29] Really thank [00:54:30] you, Adam, and thank you for all your great coverage and the stories that you bring to the world, because, uh, makes our lives easier when we cover the news.

Adam Zaki: [00:54:37] So I'll be sure to connect you with Doctor Tim, Nati, and, um, this former CFO of Enron. I know you brought him up a bunch of times. Love to do media, Andy Fastow. So I'm sure you can get him on, too. Oh, we'd.

Blake Oliver: [00:54:48] Love to have Andy. I just I just finished the Enron book that, uh. Oh, yeah.

Adam Zaki: [00:54:52] You'll get. We'll connect. And, um, I'll get you guys connected with him.

Creators and Guests

What CFOs Are Thinking: AI, Talent Crisis, Gen Z, and More
Broadcast by